Bel Fuse (US:BELFB) Yahoo Finance·2025-09-16 18:03Core Thesis - Bel Fuse Inc. is experiencing a positive investment outlook driven by operational improvements, the Enercon acquisition, and a recovery in end markets after a period of destocking [1][2][4]. Financial Performance - In Q2 2025, Bel Fuse reported a slight revenue decline of 1.3%, but gross margins improved by 77 basis points, with adjusted EBITDA reaching $35.2 million, reflecting a 27.4% year-on-year increase [2]. - Adjusted EPS modestly exceeded expectations, indicating strong operational performance [2]. Market Trends - End-market trends in commercial aerospace, defense, and networking suggest a recovery, with low inventory levels and healthier point-of-sale activity supporting optimism for the second half of 2025 [3]. - Strong bookings and guidance indicate expected revenue of $165–180 million with gross margins of 37–39%, alongside Magnetic Solutions maintaining over 30% growth [3]. Strategic Acquisitions - The Enercon acquisition now constitutes 33% of Power Solutions revenue, contributing high-margin products to U.S. and Israeli defense contractors, which supports margin expansion [4]. - Material revenue synergies from the Enercon acquisition are anticipated in the second half of 2026 [4]. Valuation and Growth Outlook - Despite recent share price appreciation, Bel Fuse's valuation remains attractive at 11.2x NTM EV/EBITDA, with potential upside indicated by a DCF and IRR framework [4]. - The company is projected to achieve a post-tax ROIC trending toward 20% by FY29, reinforcing its compelling investment case [4]. Historical Performance - Since the previous bullish coverage in March 2025, Bel Fuse's stock price has appreciated approximately 85%, validating the investment thesis centered on the Enercon acquisition and operational improvements [5].